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On the third Tuesday of September the Dutch Government traditionally announces its budget proposals for the upcoming year. On 18 September the proposals for the year 2019 have been announced. Currently the proposals are under review of the parliament. Most proposals were in line with earlier proposals and consultation documents. The highlights of the proposals are:

Corporate income tax
Gradual reduction of the corporate income tax rates. Currently there are two rates, a 20% and 25% rate. For the bracket up to EUR 200,000 the existing rate of 20% will be reduced to 19% in 2019, 17.5% in 2020 and 16% as from 2021. For the bracket as from EUR 200,000 the existing rate of 25% will be reduced to 24.3% in 2019, 23.9% in 2020 and to 22.25% as from 2021.

Carryforward loss compensation
Carryforward of losses will be reduced from nine to six years for fiscal years starting as from 1 January 2019. Restrictions to set off holding and financing losses will be abolished for fiscal years starting as from 1 January 2019.

Dutch withholding tax
Dutch dividend withholding tax will be abolished as from 1 January 2020. At the same moment a conditional withholding tax will be introduced on dividend and next thereto also interest and royalty payments. The conditional tax, which has been determined on 15%, will apply in case of involvement of low-tax rate jurisdictions, jurisdictions listed on the EU Blacklist or abusive situations.

Implement the EU Anti-Tax Avoidance Directive
Further to the above, the proposals contain measures to implement the EU Anti-Tax Avoidance Directive, including earning stripping rules and controlled foreign company rules.

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